As the investment landscape evolves, pension fund administrators are facing increasing pressure to manage larger and more complex investment portfolios. With the growing volume and complexity of investment data, the role of investment administration has become central to the operation of these funds. It is no longer just about tracking numbers; it is about ensuring data integrity, meeting compliance requirements, and making decisions based on reliable information.
Custodian banks have stepped in to alleviate the burden on administrators by providing custodian-driven investment administration services. Traditionally, pension funds have relied on asset manager records for financial reporting and compliance. However, each asset manager uses their own systems and methodologies, leading to inconsistencies and manual reconciliation processes. Custodian banks address this issue by building the accounting record directly from custody data, creating a “golden record” that serves as a reliable source for financial reporting, audit preparation, compliance, and performance measurement.
This approach has been widely adopted in countries like the US, the UK, and Europe, where custodians hold the accounting book of record for retirement funds. In South Africa, the adoption of custodian-driven investment administration is growing, with larger custodians like Standard Bank expanding their services to support the evolving needs of pension funds. These services now include tracking and reporting on alternative assets, such as private equity and infrastructure investments, which have become increasingly important under Regulation 28.
The key benefit of custodian-driven investment administration is its ability to provide operational relief in complex investment environments. With the ability to report across asset classes and markets, custodians streamline processes and reduce administrative burdens for pension funds with diverse portfolios. Customisation is also essential, as no two pension funds are structured the same. Custodians that can balance customisation with operational scale are well-positioned to serve medium and large funds efficiently.
Ultimately, custodian banks play a crucial role in enabling pension funds to operate with better data, less risk, and more control. As the investment landscape continues to evolve, the demand for clarity, reliability, and trust in investment administration will continue to grow. Custodians that can deliver independent, reconciled, and auditable data are not just safekeepers of assets; they are enablers of trust in an industry that relies on confidence and transparency.
With over R15.4 trillion of assets under custody and administration, Standard Bank is the largest custodian in Africa. As of 30 June 2025, the bank supports over R4.1 trillion on its investment administration platform, showcasing its commitment to delivering reliable and efficient services to pension funds in the region.
